Get Rich Quick Scams
All the latest Scams Revealed!
|
Want to learn about legitimate ways to make extra
money? Get the facts in the free guide to
|
|
Work at Home Scam Alert: Pyramid Scheme or MLM What's the Difference?
By Shelley Lockwood
You've got two choices.....
Short and to the point or the lengthy explanation.
To the point: One is illegal (Pyramid scheme) the other (Multi-Level Marketing) for the most part is just barely legal. Many MLM programs are simply a pyramid scheme with a twist. The twist? Constantly tweaking it to stay on the right side of the law.
Both are high risk and costly business endeavors.
On to the explanation.....
Warning signs of a Pyramid Scheme:
You have to pay to joinMoney is made by recruiting
Required to buy expensive inventory
Emphasis on recruiting others instead of selling
Promises of high profits or "miracle" products
It's difficult to differentiate between multilevel marketing and pyramids. Especially because a pyramid is multi-level marketing based.
The focal point of pyramids is recruiting. You pay to join and you make money from people joining. There is no real product being sold outside of the program.
The intention of Multilevel marketing is to earn commissions by selling a product or service. They are referred to as multilevel because they also pay you commissions for sales made by people that you recruit into the plan.
Pyramid schemes involve deception & misrepresentation and are illegal in many places. States outlawing pyramids specify that a certain percentage of product sales must occur outside of the program.
Be wary, many pyramid schemes are disguised as mlm ops. They offer products for sale but if you look closely you'll see that the products are being sold only to other members of the pyramid.
For example, they pressure members into purchasing expensive start-up or marketing kits.
Eventually the pyramid fails when no new members are being recruited, the scheme is shut down for fraud or the top dog takes off with the money. When this happens most people in the program lose their money. Only the choice few at the top walk away having profited.
Something that many people don't realize is that they can be held legally responsible for "promises" they are making. It doesn't matter if you are only repeating what you were told. This applies to product performance as well potential earning claims.
If you're contemplating multi-level marketing (or if you're already involved) make sure your statements are fact based and can be backed up.
Diligently research the company and the opportunity before you join. Don't be pressured into a decision.
In the search for legitimate ways to make extra money I've accidentally run into a couple of multi-level marketing schemes. Well..the same one twice. They did such an amazing job marketing the "Online Business Systems" that I had no idea it was multi-level marketing. I thought it was some new tool for developing a business on the net.
Twice now I've purchased "decision packs" from websites. About two years had lapsed in between. In that time their marketing had improved tremendously. To the point that even after having reviewed the second decision pack I still didn't know it was a multi-level marketing opportunity. Better yet for the same program.
I realize now that the website was designed to get my contact information. It never once mentioned exactly what the business was, what the products were or which Company. The decision pack was an impressive brochure full of testimonials about how great it is to be rich. Quoting some market trends like babyboomers, health & wellness but still nothing about the business or products. A CD, a DVD & a VHS all of the same presentation. Which really wasn't a presentation more of an info-mercial with rich people sitting around talking about how the "System" changed their lives.
It wasn't until I was an hour in to their follow up conference call that a little bell went off; Herbalife. I asked the question "What percentage of overall product volume is sold to consumers rather than to program participants?" Dead air for a second then the more seasoned coach piped in something about the legal minimum being respected. Nobody could give me a number though.
Three people were in on that call. Not one of them could give me any solid product sales advice. They focused mainly on recruiting. They did know of at least one person who concentrated on sales. The suggested split; 80% on recruiting and 20% on sales.
$100.00 for the website + $50.00/month hosting + $299.00 to get started. They'd throw in a couple samples for my personal use.
Then I remembered why I didn't sign up last time. It wasn't even those amounts. So I asked "what percentage do I make on my recruits' sales?" The lengthy explanation started. I interrupted and told them I hadn't signed up last time (two years earlier) because I was able to figure out that I wouldn't actually make anything off of my recruits until I made supervisor (or whatever it's called). Turns out that's still the case.
I would need to purchase 4000 points worth of product (about $4000.00 why they don't just say dollars, I don't know) before I ever saw any percentage of sales made by my recruits or I could just invest that up-front. Believe me it's like pulling teeth to get that information. I could make a low mark-up (profit) on my own sales, but would need to achieve that position to get a decent margin.
There's just something wrong with an opportunity that suggests 80% effort on recruiting. Aren't they supposed to be in the business of selling product to consumers? Just how honest is it having people recruit distributors they won't benefit from without another $4000.00 investment. Why would I have to spend anything at all for the right to sell their products?
In the end I was finally able to ascertain that as long as someone is not a supervisor commissions from their recruits' sales go to the team leader who of course is a supervisor.
Too much deception & misrepresentation as far as I'm concerned. Since then I've checked the number of complaints against Herbalife and some distributors. One FTC report alone sites 97 complaints. They are definitely on the Federal Trade Commission's radar screen.
I didn't bother to request my $39.95 refund for the decisions pack. I felt bad for my would be recruiter. She seemed pretty honest and I think that call opened her eyes to a few truths.
If you are interested in getting involved in a multi level marketing program, use the MLM Checklist for some helpful guidelines.
Always, take time to think things through before moving ahead.
Take care,
Shelley
The Nasties Article List:
Home assembly scams revealed
The truth about medical billing scams.
Envelope stuffing scams revealed
My own personal story about how I was scammed into buying a franchise.
Work at Home Scam Alert: Pyramid Scheme or MLM What's the Difference?
Avoid online and work from home scams
Beware scam artists posing as drop shippers
Misleading campaign and the $5 solution.
Work at home scam alert Fake suppliers exposed!
A chainletter by any other name is still a chainletter. Chain letter scams revealed
Beware this so called lawyer approved biz op
Avoid online and work from home scams.
Those e-mails you get promoting foreign lotteries are scams
Spam revealed how scams arriving by bulk e-mail hurt everyone.
The do not spam registry scam exposed
Some suggested techniques for dramatically reducing the amount of spam you receive from your website e-mail addresses.
The 12 scams most likely to arrive via spam e-mail
Beware ecards may be delivering more than you bargained for
Find out just some of the ways spammers harvest email addresses
email scam revealed beware ebay second chancers
Beware the cable descrambler spam scam.
Unless you are protected your digital products can easily be downloaded for free.
Beware domain registry scam artists
Our domain name and website were held hostage. Read all about it so you can make sure it doesn't happen to you.
2004 fraud trends FTC report
According to the FTC these were the top 10 consumer complaint categories in 2003
Some interesting numbers about e-consumer complaint trends from April 2001 to June 2002.
Do you know how well you are protected when using your credit card to make online payments?
Credit card scams explained
A brief outline of the consumer fraud complaint trends for 2001, 2002 & 2003
What is online phishing? Learn the warning signs
Beware when posting your resume online.
Spoofing or Phishing scams are on the rise. Read about them and learn how not to be scammed by them.
Article about an AOL e-mail hoax that floated around.
Self defense tips for seniors to avoid investment scams
Learn how to spot internet investment scams versus real investment opportunities
Links to all kinds of articles about scammers being busted
Are you a safe cyber surfer? Read these important pointers and make sure.
Attention to All Scamsters
This section is dedicated to spreading the awareness of computer viruses and how to stop them.
It's not bad enough we have to worry about viruses, we also have to try and figure out which ones are real viruses and which ones are only hoaxes.
Federal Trade Commission Consumer Feature
misleading marketing tactics exposed at last
Have you ever been mouse-trapped?
My SFI experience
A sneaky spamming method revealed.
Free Gifts that are promised after the sale are a thing to watch out for
Here's a dishonest marketing method.
An article explaining internet spam and how to escape it
ebay scam alert beware of fake escrow services
Telephone bill cramming scams explained
Look out for the "local singles" 800 cramming scam
Watch out for this order scam!
Look out for these prepaid subscription or free magazine scams.
Beware this misleading method called domain slamming commonly used by many domain registrars.
How a small rebate check in the mail turned out to be an ISP scam.
Ever entered a sweepstakes draw and ended up with a monthly bill?
Don't be "crammed" by this website trial scam.
MLM
The opinions on MLM ops vary. Here are just a few!
MLM opinions vary, some love it, some hate it, some think it's an outright scam. Check out some of our MLM poll results.
A person's views on MLM
Commentary: The Truth About MLM Programs
Checklist to use before joining an MLM op
How Ponzi Schemes and Pyramid Frauds Work
Editorial Reviews: Amway Motivational Organizations: Behind the Smoke and Mirrors
Discover the dirty little marketing tricks online home business opportunities are using to take your money!
Federal Trade Commission Consumer Alert
Discover the dirty little marketing tricks online home business opportunities are using to take your money!
Read William's personal struggle promoting Imagine 2020 only to never receive his commissions.
People share their Imagine2020 experiences
Robert L. Fitzpatrick discusses Multi-level marketing
